No coin-flipping: OCC locks GENIUS Act reserves, redemptions and yield rules

The U.S. Office of the Comptroller of the Currency finalized rules Wednesday implementing the Guiding and Establishing National Innovation for U.S. Stablecoins ($GENIUS) Act for payment stablecoin issuers and related custody activities under its jurisdiction. The rule and the $GENIUS Act are set to take effect Jan. 18, 2027. Issuers must maintain reserves worth at least as much as their outstanding stablecoins and generally process redemption requests within two business days.

The final rule applies to national banks, federal savings associations, federal branches of foreign banks and their subsidiaries, as well as nonbank firms seeking or receiving federal qualified issuer status. It also covers state-qualified issuers when the OCC has regulatory or enforcement authority over them, certain foreign issuers, and custody activities at OCC-supervised firms. Requirements cover reserve assets, redemptions, risk management, audits and reporting, custody, applications, supervision of foreign issuers, and a capital and operational backstop. The regulations also address transitions to the federal framework and OCC authority to revoke issuer approval.

The OCC dropped its proposed presumption that certain arrangements involving affiliates or related third parties violate the GENIUS Act’s yield ban while retaining the prohibition against issuers paying holders interest or yield solely for holding, using or retaining their stablecoins. The agency offered no examples of potentially prohibited arrangements and created no safe harbors for existing exchange reward programs, which will be reviewed case by case. The OCC said it “will apply the language of the statute to the facts and circumstances of any particular arrangement.” It suggested that “solely” carries significant weight and that a reward that “might be made, at least in part, for other reasons” would fall outside the ban. The agency retained authority to act against attempts to evade the prohibition.

Signed into law in July 2025, the GENIUS Act bars anyone other than a permitted issuer from issuing a payment stablecoin in the U.S. and prevents digital asset service providers from offering or selling stablecoins to Americans unless they come from a permitted issuer or a foreign issuer that meets certain requirements. “We are providing a clear, practical framework for payment stablecoin innovation, with strong standards for reserve backing, redemption, and risk management,” said Comptroller of the Currency Jonathan Gould. Treasury Secretary Scott Bessent called the legislation a “watershed moment in American finance” and compared it with Abraham Lincoln’s National Currency Act of 1863, which “established a national framework for bank-issued currency.” The efforts are more than 160 years apart, and Bessent said the OCC rule would support “private-sector innovation, competition, and American leadership in digital assets.”

The OCC received hundreds of comments on its proposal from crypto companies, community bankers, trade groups and academics, among others. Given “the nascency of the industry,” the agency said it would monitor the sector and adjust its framework where necessary. Gould had said at the Wyoming Blockchain Symposium, hosted by SALT in Jackson, that the OCC was working at a rapid pace and expected to publish a final rule by November. The agency will separately announce when it begins processing issuer applications and waiver requests, while the OCC and Treasury Department will address Bank Secrecy Act, anti-money-laundering and sanctions requirements in a separate rulemaking.